Reuters, Jerusalem- The two candidates favored to succeed Israeli Prime Minister Ehud Olmert said on Sunday they may seek to forge a government with rightists, a step that could hurt peace talks but avoid an early election.

Transport Minister Shaul Mofaz, a former defense chief known for using tough tactics to crush a Palestinian uprising, said if he was chosen in the September Kadima party leadership contest he would set up a unity government by November.

Mofaz is second favorite to win the poll, behind Foreign Minister Tzipi Livni. "Israel doesn't need a general election," he told a rally near Tel Aviv, in remarks quoted by Israeli news media.

Olmert, dogged by a series of corruption charges, announced last Wednesday he would step down once his successor in Kadima was chosen.

Livni said in an interview she too would try to forge a unity coalition, Israeli parlance for an alliance that includes right and left-wing parties alike.

"I believe that there's a place for a government that represents unity in Israel," Livni told CNN in an interview. She also insisted she was still committed to a U.S. plan to achieve a peace deal with Palestinians by early next year.

Benjamin Netanyahu, the rightist Likud leader and former prime minister, who could take part in such a unity alliance, has been critical of peace moves and quit Israel's cabinet over a 2005 Gaza pullout.

Livni acknowledged she might not succeed in cobbling together a government. "This depends also, not only on my desire, intentions, but also on the other part of Israel's political willingness to do so," the former intelligence agent added.

Olmert denies wrongdoing. Police suspect he took cash from a U.S. fundraiser and submitted double receipts for travel expenses.